Royal Enfield focusses on its own branded gears and accessories as the new growth engine

This area of business is a big space for vehicle makers to tap into and these are highly margin accretive to the business as well.

In the quest to milk its iconic motorcycle brand Royal Enfield, widely called Bullet, the favourite of the best bikers in India, its owner Eicher Motors is adopting a strategy that mirrors what other iconic brands have successfully monetised.

Royal Enfield is not just a bike. The company wants to create a new revenue stream by selling its own branded gears, accessories, apparels and more. Royal Enfield gear like T-shirts and helmets can be found in standalone stores at Khan Market in Delhi or in Colaba, Mumbai, where the core business is just gears and accessories and not bikes.

The non-motorcycle business (spares, apparel’s, accessories etc) accounted for 8% of Royal Enfield’s total business in FY-17, which is estimated to have crossed 10% in FY-18 and Eicher sees it more than doubling in the next five years. People in the know say it could potentially be a $800 million to a billion dollar business - about the same size as Ferrari’s non car business or Harley Davidson or Triumph motorcycles - i.e. a quarter of the total revenues.

As the riding culture grows in India, motorcycling is becoming a way of life say biking connoisseurs. Owning a brand like a Royal Enfield, Triumph or Harley is a fashion statement now. Not surprisingly, the company is ensuring that its gears and apparels are found in upmarket locations across the country. Royal Enfield gears, T-shirts, jackets, helmets and shoes can be found in standalone stores of Khan Market in Delhi or in Colaba, Mumbai, where the core business is just gears and not bikes.

Apart from standalone stores, the company has gradually seeded itself in retail chains like the Central Mall across half a dozen locations, which eventually will turn into double digits, where Royal Enfield will retail its gears, helmet and apparels amongst other things.

Speaking on the sidelines of Royal Enfield Classic 500 Pegasus limited edition launch, Samrat Som, head, apparel and accessories business at Royal Enfield told ET “the whole idea is how do you convert the newly converted motorcycling chap? Inspire him to adopt motorcycling as his “way of life?” through the apparels and accessories the company is constantly able to engage with the customer during the entire ownership lifecycle, says Som.
Som declined to give the numbers but agreed on the potential growth of 100s of millions of dollars.

“I can’t quote numbers but these are potential opportunities. We know that a successful motorcycle business like ours could have a sizable turnover coming from non-motorcycle business like global peers,” added Som.

And the potential is something that has begun to look apparent. At 8 lakh units, Royal Enfield branded helmet was the fourth largest brand in the country in FY-18. In the year gone, Royal Enfield sold more than 1 lakh riding gears and 8 lakh helmets. For every 7 motorcycles that Royal Enfield sold last year, it sold one gear.

The company says usually jackets and helmets are considered purchase decision, but out of its experience of selling gears and accessories, the company has started getting a lot of impulse buying at these retail stores. Interestingly 33% of the total helmet sales come from the central departmental store for the company. Eicher is focussing on high footfall areas or malls to generate additional business. It is also in discussion with several other mall majors like Phoenix for further expansion.

All this is apart from more than 800 touch points – which will cross 1000 in few years where it sells gears, apparels, shoes in some form or the other. Royal Enfield is also leveraging the online platform to give access to brand Royal Enfield, apart from its own online platform. The company sells its merchandise through Amazon, Flipkart, Myntra among others. Sales through ecommerce accounts for 16% of the total non-motorcycle business.

Vimal Sumbly, managing director of Triumph India Motorcycles, said 12.5% of his company’s revenues come from non-motorcycle business of gears, accessories, parts and that segment of business has been doubling every year.

“Globally, bike majors enjoy about 15% to 25% of their total revenue from gears and accessories business, but the potential in India is huge. Our nonmotorcycle business should touch 20% in the next three years,” added Sumbly.

Triumph has been increasing its fashion clothing collection rapidly and with every new launch, the company offers over 50 customisation or accessorisation option to its customers. Triumph has summer, winter and core biking clothing options. The apparels are no more restricted just for the male rider. Either. There are options available for the entire family including the women and kids.

Indian brands can potentially enjoy almost a third of their business from allied segments, which is double of the global average thanks to the huge bike park and growing number of millennials, said the head of Triumph Motorcycles in India. “The youth of today is not buying a product; he or she is buying into the brand.

They are buying into a lifestyle. Their understanding of brand is very sharp and they like to express and indulge themselves. All this presents a huge opportunity for motorcycle brands like ours to keep them engaged with the brand,” added Sumbly.

This area of business is a big space for vehicle makers to tap into and these are highly margin accretive to the business as well.

Even for a new entrant like Ducati which entered in 2013, the share of apparels and accessories already accounts for 16-21% of the overall market. “It is a very important part of business and an avenue to build a brand. We always say, that when you sell a bike, you dont sell just the bike, you also need to sell accessories along with it. There are hundreds of options available for a rider to personalise his bike. He can buy add ons that match his personality or the kind of ride he prefers - on road, off road, ride on the hills, appropriate accessories are available to enhance the ride,”said Sergi Canovas, MD at Ducati India Pvt Limited.

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